New day dawns after grain keg battle

Williams-based Australian Keg Company entrepreneurs, Rod and Ioanna Culleton have started the year with a grain-keg patent victory under their belts.

The duo received word of their success in a long-running legal dispute in the Federal Court in Queensland, on Christmas Eve last year.

The couple say they are now focused on business rebuilding and producing a first-class horse feed that is distributed in a patented grain keg.

The equine feed is made in a new multimillion-dollar, dedicated and equine-only mill in NSW, DEqMO Feeds.

But the cost of the dispute, involving a challenge to the grain keg patent by N&E Bowder, Belmark Rural and Hay Queensland was large, financially and personally.

"It is like we were in a death roll, in the grasp of a crocodile, for a year," Mr Culleton said.

"Against all odds, we have remained commercially viable."

How the Culletons ended up in court and then won the case is a long but fascinating story.

This is the first time they have talked to the media about the grain keg invention, invented by Mr Culleton in 2003.

At that time he was in hospital with a minor back injury, after lifting bags of equine food.

The Culleton couple's horse feed has been highly sought after in WA since the late 1990s.

It is like muesli for horses, containing sunflower seeds, barley, corn and lupins with cooked and rolled Wandering oats.

There are different varieties, with added minerals and vitamins.

Mr Culleton said the clean feed, which featured pristine WA-sourced grains, was prized fare.

"We don't have to dilute our product with molasses and we do a beautiful mix," he said.

It also contains extruded corn - the extruding process makes starches more digestible - extruded barley and faba beans.

Mr Culleton said molasses was unnecessary.

"The horses love it," he said.

But old-school trainers often needed educating.

"In the early days, trainers said 'Our horses have never eaten anything without molasses'," he said.

"I explained molasses is only put on so feed companies can charge for water, as it adds to the weight."

Simple tests show poor-quality oats float to the top of buckets of water, and are light as chaff.

"Not all oats are the same. Wandering oats have a higher, digestible kinetic energy than other oats and are suitable for race horses," Mr Culleton said.

When he was then laid up in hospital, he got out pen and paper and designed the business' first grain keg.

The large, rectangular storage container is made of plastic, and releases feed on demand.

WA horse owners quickly ordered it to deliver feed.

Unlike traditional feed troughs, rodents cannot get to the grain mix and feed stays in good quality for three months in the grain keg, whereas it can sometimes quickly goes stale in silos.

"A lot of these stables are in metro areas and storage of grain has to be rodent proof," Mr Culleton said.

The grain keg was originally manufactured at a Dalwallinu workshop, after patents were obtained in 2003.

Mr Culleton said he was also passionate about protecting the environment and was proud his grain keg eliminated bag-packaging waste.

The keg has an elevated gravity system which is simple and does not require mechanical devices.

"We always knew it had to be elevated, but the science behind that had to be perfect," he said.

"The bottom part is hollow and the vessel had to be safe to cart on a truck without any risk of toppling."

On arriving at the stables, the grain keg is side lifted with a forklift and put on a trolley.

"We are like the old milko - we take the clean grain keg in and remove the empty one," Mr Culleton said.

"It is washed and sanitised at the mill and then gets reused."

Many of his past and present clients are Australia's top racing trainers and stud operations, including Berkeley Park Stud and Heytesbury Stud.

From 2003 to 2010, the Culletons gradually secured 85 per cent of the WA market supplying commercial horse operations.

"We were the producers of the grain, manufacturers of the packaging and owned the transport company, so we had a complete conduit to the end customer and controlled our price," Mr Culleton said.

A grain keg costs $30 a month to rent while feed retails up to $1300 to $1400 a tonne, depending on the mix.

"In 2008, our turnover was up to $5 million and most of our WA customers were still saving 30 per cent on feed," he said.

Then, in September 2009, the couple entered a joint venture business deal with a large Eastern States equine feed manufacturer.

Mrs Culleton said since then there had been a disruption to the business.

Back in 2009 the Culletons did not want to outlay the capital for a new DEqMO mill operation, in the east.

Mr Culleton said they opted instead to enter into a joint venture with the existing national operator.

However the partnership soured.

Mr Culleton claimed the parties had different business philosophies and associated issues.

The business partnership was formally terminated in 2011.

But, in the middle of harvest in Williams in 2011, Mr Culleton said he got wind of an unrelated third party manufacturing a version of his grain keg.

Customers began to ring him direct, complaining they were having issues with the "new kegs".

It was raining, so Mr Culleton took a break from harvest duties and flew to Melbourne to investigate.

"The grain keg had been taken away from customers and replaced with an infringing grain vessel, but printed "Grain Keg" literature was still on the replica product," he said.

Mr Culleton said then, after consulting a patent lawyer, the pair sent a letter to three companies - N&E Bowder, Belmark Rural, and Hay Queensland.

"We had patent protection, so we wrote to them and said please come to the table and have a chat," he said.

"The parties replied claiming we made an unjustified threat.

"'You have just accused us of copying your invention', they said, and then they quickly commenced action against the company in the Federal Court of Australia in Queensland, the furthest jurisdiction from WA - the expense to take a legal team to Queensland was enormous."

It was one year and 21 days before an outcome was reached.

The case went to trial and the judge handed down a decision on Christmas Eve.

Although the case found the grain keg patent had been infringed, the couple said the ordeal had caused disruption and a downturn to their business capacity.

After the win, the Culletons say the future is bright.

"We believe that the new equine feed and grain keg plant in the Eastern States will be recognised as producing the best horse feed in Australia," Mr Culleton said.

He would not say where the new mill is based.